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“Mandatory” offers in detailed assessment proceedings

I just had my first hearing dealing with an application to strike out Points of Dispute and have the Bill assessed as drawn due to an alleged failure to comply with PD 47 para.8.3:

“The paying party must state in an open letter accompanying the points of dispute what sum, if any, that party offers to pay in settlement of the total costs claimed. The paying party may also make an offer under Part 36.”

I’ve previously commented on how I consider these applications to be misconceived, at least if they are argued properly by the paying party.

The application notice argued:

“the Defendant has failed to make an open offer of settlement in accordance with Paragraph 8.3 of the Practice Direction to CPR Part 47.9. … The provision is a must provision and there is no discretion for the Defendant as to whether or not an open offer is made”

The Claimant’s Skeleton Argument continued in a similar vein:

“the Defendant served Points of Dispute without an open offer of settlement in breach of section 8.3 of the Practice Direction 47. … Contrary to the rule, the Defendant served Points of Dispute without an open offer of settlement… Section 8.3 is obligatory. The paying party ‘must’ provide the open offer”.

Whatever the other merits of the application might have been, it was brought on the basis that there is an absolute requirement to make an open offer when serving Points of Dispute. No such duty exists: note the words “if any”.

The Points of Dispute here had been served under cover of an open letter stating:

“We are awaiting instructions and will put forward an offer as soon as possible”

The judge accepted that this amounted to strict compliance with the Practice Direction. It set out in an open letter what offer, if any, was being made at that point: none. There was therefore no breach and the application was dismissed.

Barrister Sarah Robson reported on another similar unsuccessful application, made by the same firm, in the comments section of a previous post on this topic. I would be interested to hear the outcome of any similar applications, particularly where the point has been argued properly.

In both cases however, there were in fact ‘offers’ (the DJ’s interpretation that you were waiting instructions amounted to an offer is stretching rather far, as clearly you had no instructions and could not be making no offer)

Neither case represents failure to make an offer at all

I have obtained a DCC on a case where there was no offer whatsoever made. The PP huffed and puffed for a while, but did not apply to set aside. I have warned several defendants about not making an open offer, making an application on the one that didn’t then settle, which they then caved on and paid my original offer pre pods on, plus my application costs ( in discussion direct with their barrister the day before the hearing)

I will be more than happy to continue to make defendants aware of their default and make applications until they stop ignoring the rules – they may not like the rule, they may not understand the rule, but they have to comply with it.

I can see the point of compelling the paying party to make an early open offer which they can later be commended/criticised upon but why not make it more official by creating a form that can be completed and served along with the points of dispute?

I propose ‘form N259 – notice of open offer by paying party’.

This obviously doesn’t deal with the wider issue of the vagueries of 8.3 but it will formalise the position in relation to open offers.

However I am at a loss to see on the above how the rule was complied with considering you stated “We are awaiting instructions and will put forward an offer as soon as possible” – clearly no offer has been made as you are without instructions.

All that is required is an offer of nil with clarification that this is made in accordance with 8.3 and that you will revisit as soon as in receipt of instructions.

An offer is made in an open letter so the Costs Judge can see paying party’s offer before assessing the bill. There is no equivalent provision in relation to receiving parties offer.

The Costs Judge can also consider any other offer made by the paying party at any time. In the case of provisional assessments, the Costs Judge also has either Part 36 or Calderbank offer in a sealed envelope.

The question is therefore can offers other than para 8.3, that may be of a different format (ie Calderbank)and amount and at a differnt time, be taken into account by the costs judge when deciding who pays the costs of assessment?

IF THE ANSWER IS YES: para 8.3 is pointless. Paying parties may offer less in the para 8.3 offer than was offered in an earlier or later calderbank/Part 36 offer and rely on the offer not made pursuant to para 8.3. Therefore what is the point of making an open offer? There is no benefit to the receiving party and it will not assist the Costs Judge.

IF THE ANSWER IS NO: the rules should be amended to properly reflect this.

Mr Wheatcroft – paying parties need to make early offers without para 8.3. Receving parties claim interest and costs of assessment for the period before the paying party makes an offer. If you receive PODs without having had an offer at that stage I suggest you consider the PODS in great detail and charge the paying party for your trouble! para 8.3 is of no assitance in this regard and if it were the only offer that could be relied on it would render offers prior to service of PODs pointless.

With regards to applications for costs in full in the absence of a para 8.3 offer I can only commend receving parties for such imaginative applications for non existant sanctions. My suggested response would be every time a bill and N252 is served that does not comply with a mandatory section of the CPD (less than 10% of bills do) paying parties should make equally spurious applications for the bill to be struck out.

These decisions are quite useful, but again, I agree that arguably these cases can be distinguished from many that I have seen which contain no open offer whatsoever.

I would also be interested to hear from anyone who has made an application to strike out POD or POR due to non compliance with the pratice to keep these documents concise and to keep POR restricted to preliminary points and concessions. Most of the examples I have been seeing do not comply, which suggests people are just ignoring this guidance.

The only logical benefit I can see of the open offer is to give the Judge an indication of the level of a suitable safe interim payment amount it could make on its own case management powers (pre-assessment orders for example) to avoid any applications being made by disgruntled receiving parties.

Other than this, it would appear to be a useless direction. I often have down already an offer which far exceeds the open offer accompanying the PODs. This sometime confuses an opponent who sees a much lower offer than I have already provided (which I can quite understand).

Perhaps both sides could take a pitchfork and head towards the maker of the rule to demand he or she provide some indication of the thought process or the relevance of the direction so we can at least see why this seemingly duff practice direction was inserted.

nobody is making up sanctions. I have referred the Court on each occaision to a failure of a Defendant to comply with a very clear PD which is couched in terms “must”, and invited them to make the appropriate Order. The Courts have been happy to follow suit, in dealing with cases proportionately – see CPR 1.1(f).

I for one cannot understand why Defendants are so prepared to flaunt this clear rule

WPsatc offers are not refer able to the court SAVE on the question of costs, and open offers do not supersede them

Although given , unlike Part 36 offers which can exist in multiplicity, open and WP offers cannot in reality co-exist, I would caution anyone to have a Defendant clarify what their ACTUAL offer is, as otherwise I expect Defendants to be devious and say earlier offers are no longer open

In family proceedings where costs don’t follow the event (generally), the rationale behind open offers is that there may be a liability for costs if a reasonable open offer is rejected. Any without prejudice offer of settlement is ignored on the issue of costs.

Clearly the same sort of procedure makes no sense in proceedings where costs do follow the event unless the rules were tweaked to ignore without prejudice offers.

Getting rid of WP offers does actually makes sense if open offers become the norm.

Why is everyone ignoring the words “if any”?
Simon quite rightly points them out in his post and then there follows a stream of 18 comments in which everyone carries on as if the words do not exist!

There simply cannot be an obligation to make an offer created by a Practice Direction (note this is not even a rule, merely a practice direction) which says you must make an offer but only if you have one to make.

annon – you make a good point to be fair and I can see how the practice direction might be interpreted in that way. Also, you are probably right that a paying party may as well make a nil offer to be on the safe side – as ridiculous as that situation is.

However there are two more things to consider –

1. There is no sanction stipulated for not complying with the practice direction. It is a stretch to say that service is ineffective if an offer has not been sent.

2. It is a Practice Direction not a Rule. I may be wrong about this (and I am sure someone will tell me if I am!) but I am fairly sure a Practice Direction does not have force of law in its own right – it is an aid to interpretation of the rule. Thus a practice direction cannot extend the rules. I can see nothing in the rules governing service which could lead to a requirement to make an open offer with points of dispute.

The main issue with this practice direction is that it has no obvious purpose. No one is really sure why it’s in there. Doesn’t the ACL have people sitting on the CJC Committee for this sort of thing?

Briefly, in response to Voice of Reasons’s numbered points:

(1) I do think it is difficult to argue that service is invalid. How many RP’s have served an N252, forgot an additional liability enclosure, and wished that they could just argue it as invalid service and re-served, eh?

However, the court can readily apply a sanction even if one does not exist. The most obvious would be an unless order with a strike-out clause in the event of non-compliance. The issue for both parties comes back to whether the rule has an important purpose, a trivial purpose or a lost-in-translation purpose. We are still not sure. Is an application worth it from the RP pov or is it just point scoring?

I think the suggestion to ‘just offer nil’ is unwise. If you are a costs draftsman without instructions then you cannot make an offer of nil. You do not have instructions to make any offer and an offer of nil you are acting outside of your authority.

Take this scenario:

(RP) Serves N252
(PP’s draftsman) Serves PODs – with no knockout points – and placeholder offer of nil
(RP) Requests provisional assessment with nil offer in bundle
(PP) Makes a Part 36 offer that should be protective
(DJ) Assesses costs at less than PP Part 36 offer
(PP) Suspects that DJ looked more favourably on RP’s bill as nil offer indicated that PP was not behaving sensibly

PP and PP’s draftsman have a spat.

IMO, the most sensible approach is for any PP draftsman to send his PODs for checking with details of the value of the reductions (or value of the bill less all reductions). The PP can then make an informed choice to offer nil, offer in line with his POD’s (i.e. best case scenario) or make a more considered offer.

However, the vibe i’m getting here is that PP draftsman do not have authority to make offers (i.e. they are awaiting authority) but do have authority to make their best PODs, sign them and serve them without PP seeing them. This, if correct, is bizarre. It would logically follow that if a draftsman is given the authority to get on with the POD then why not authority to make an offer in line with the bill less reductions?

(2)The name of the relevant case escapes me (though it was quoted in the comments to a blog post here in the last few weeks). I do not recall the exact wording, but you must comply with ‘must’ provisions in practice directions and have good reasons for not complying with ‘shoulds’.

PDs are not Rules right enough (KU refers), but given the Pre Action Protocols are now PDs and non compliance issues are favourites of PPs to allege premature issue and limit to fixed fees, lets see you tell a Court they have no force?

Similarly , PPs for years have relied on non compliance with CPD 32 to avoid additional liabilities – a point mentioned in fact by RP above even – so where can you say you can disregard the PD now?

Rather selective thinking again by defendants – now there’s a novelty!

On a lighter note, where in the rules does it say any more where PODS even have to be signed now? The omission is glaring, and while some will say CPR 22 covers it, I beg to suggest PODS are NOT a document where signature is required

Finally, the suggestions here that all defendants can’t make PD 8.3 offers as they are ‘awaiting instruction’ is tosh. 99% of defendants have no difficulty in calling up and making offers through their delegated authority, or making incorrect (still) “47.19” offers (heaven help us!!), and yet can’t be bothered to make an open offer with the PODS service. It’s not lack of instruction, it’s stupidity, or a deliberate flouting of the rules as they don’t want the Court to see their offers – usually because the offers are rubbish, and they know it

Reading between the lines of your post I can only assume that you have regularly failed to comply with CPD 32.5 when serving bills and that you act on behalf of clients who routinely issue proceedings prematurely.

CPD 32.5 has a clear sanction under the CPR (Rules 44.3B(1)(c), (d) and (e)). This is not a sanction defendants just made up themselves. There is even a logical reason for the rule.

A Defendant suggesting that costs in a case that has been issued prematurely should be limited to the level they would have been had the case not been issued prematurely is hardly a good example of outrageous defendant behaviour.

Your interpretation of the overriding objective as meaning proportionality equates to applying the severest of sanctions possible for every breach of a Practice Direction is somewhat dubious to say the least.

This is lucky for claimants as very few bills comply with the PDs entirely and someone who has struggled to comply with rules that have a clear sanction would find most of their bills were struck out entirely on the interpretation.

thank you for proving that oldest of adages, never make an assumption lest you make yourself an….

The referenced points to the PD’s , was to illustrate that the Courts have never before ignored them, and are less likely to do so now.

I for one never mentioned anyones “behaviour” – if a claimant issues prematurely, then they should face sanctions rightly. The defendant there will rely correctly on the PD’s in the Protocol

My interpretation of CPR 1.1, is bourne out by the Courts, although I accept you may not have the advantage of that experience. I commend you to audience before a RCJ on any of many circuits, whom have submitted the view in seminars that non-compliance, will result in strike out.

If you are routinely experiencing claimants whom, as you say, are routinely failing the PD (I note you give no examples) in how their bills are presented, and yet are not advising your clients regarding the proper applications to make, that is your prerogative obviously. Just as you will be advising them no doubt to disregard the PD 8.3 under current discussion.

The fact remains however, it is a PD, you may not like it, but fail to comply and the risk is that applications will follow.

(p.s. just for your peace of mind, I was one of the first to make applications for failure to comply with CPD 32, and my bills have always complied thanks )